Online brokerage services are booming: They provide investors with a quick and simple way to trade shares, ETFs and crypto assets via their computer or smartphone. Such digital offerings are particularly popular among the younger generations. As a result though, there is also a change in investment behaviour: users of online brokers and especially neo-brokers do not make use of investment advice and primarily use the services for “execution only” trading. Doing so comes with both advantages and disadvantages that investors should be aware of. The latest edition of the FMA’s “Let’s talk about money” customer information series, entitled “Just the shares, please!”, explains the opportunities and risks attached to execution only trading without advice.
The pros and cons of “execution only”
The advantages of execution only trading are clearly apparent: transactions orders are simple and convenient, are settled quickly, cost-effectively and transparently, while providing investors with full control over their investment decision. However, there are certain risks that are not to be under-estimated: You need to be able to realistically assess your knowledge and experience, your investment objectives, financial situation, risk appetite and the extent to which you are able to sustain losses. You need to inform yourself about the financial product and to consider the attached risks and opportunities, which often requires a depth of expertise. You need to manage your risk yourself, especially how you prepare yourself for changes in market conditions, and how you are able to react to them. And there is also a lack of objectivity of a second opinion.
All this and other aspects are explained in the new FMA publication “Just the shares, please!” in clear and easy to understand language. Interested investors can download the publication from: Just the shares, please! – Let’s talk about money
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